Mood Generates Q1 Positive Free Cash Flow of $4.6 Million

Mood Reports 55% Increase in Gross Site Additions to Achieve 1,797 Net Site Additions in the First Quarter, with Gross Site Additions in Q1 at the Highest Level Since 2012

TORONTO, Thursday, May 10, 2017 – Mood Media Corporation (“Mood Media,” “Mood” or the “Company”) (TSX:MM), the global leader in elevating Customer Experiences, today reported its first quarter 2017 results.

Recent Highlights

  • Mood reported revenues of $110.2 million in the first quarter of 2017, down 1.0% relative to the prior year. Underlying revenues, which exclude the effect of foreign exchange translation and asset divestitures, increased by $1.5 million on a year-over-year basis, or 1.4%. In the quarter, In-Store Media revenues declined by 3.4% on an underlying basis, driven primarily by customer equipment and labor large job install delays in the International segment, as well as declines in recurring revenues. BIS and Technomedia grew their underlying revenues in the first quarter relative to prior year.
  • The Company achieved free cash flow of $4.6 million in the first quarter of 2017, which was stable relative to prior year when adjusted for foreign exchange and for the prior year disposal of Mood’s former French speaker manufacturing business, Majorcom.
  • Mood’s key performance indicators show increasing traction from gains in sales and operating performance. The Company reported net site additions of 1,797 in the first quarter of 2017 (compared with a decline of 2,841 sites in the first quarter of 2016). In the first quarter of 2017, the Company grew its number of gross site additions by 55% relative to prior year to 16,403, making the quarter Mood’s best quarterly performance since 2012.
  • The Company’s monthly churn rate was 1.2% in the first quarter of 2017 compared with 1.1% in the first quarter of 2016. ARPU in the first quarter was $40.15, a reduction of 4.0% relative to prior year. Excluding the impact of foreign exchange, first quarter ARPU declined by 3.1% relative to prior year.
  • Mood Adjusted EBITDA was $20.6 million in the first quarter of 2017 compared with $21.8 million in the prior year’s first quarter. On an underlying basis, excluding the effect of foreign exchange translation and asset disposals, first quarter 2017 Adjusted EBITDA declined by $1.2 million relative to prior year. The Company believes that the decline in first quarter underlying EBITDA is primarily related to temporary large job install delays in its International In-Store Media segment as well as declines in North American recurring revenues.
  • The Company’s 2017 global transformation, integration and consolidation initiatives are expected to deliver annualized savings of approximately $6.0 million, compared with Mood’s original estimate of $3.0 million, raising the total annualized transformation savings delivered since the efficiency program began in the fourth quarter of 2013 to more than $33.0 million by year end 2017.
  • Ongoing in 2017, Mood expects free cash flow to be positive and Adjusted EBITDA to be stable relative to 2016, when adjusted to reflect the announced sale of BIS. Mood expects continued positive momentum in North America In-Store Media recurring revenue trends with improved new sales and reduced churn driven by investments made in 2016 in the areas of Premier sales, Systems sales, Local inside sales, service delivery & marketing. Similarly, International In-Store Media is expected to show positive momentum in recurring revenues. Offsetting some of the recurring revenue gains will be increased investments in sales, partnerships and content expansion, as well as a delay in equipment & labor revenues already sold and committed from an international automotive chain client. Technomedia is estimated to gain ground in 2017 from its EBITDA performance in 2016.

“Our first quarter results met many of our expectations and we remain on track to deliver 2017 full year guidance,” said Steve Richards, Mood’s President and Chief Executive Officer. “We have begun the year with solid momentum, adding 1,797 net new sites in the first quarter, driven by significant growth in North American customer wins across several product lines. Mood is experiencing increasing interest from leading brands looking to gain a critical competitive edge by leveraging our Sound, Sight, Scent, Social & Systems solutions.

“We posted strong gains in equipment and labor revenues in the quarter, driven by higher levels of customer installations in our North American In-Store Media segment and improvements at Technomedia and BIS. These gains were partially offset by installation delays in the International In-Store Media segment, which were anticipated and communicated previously.

“The agreement we announced on April 13 for all of Mood’s outstanding common shares to be acquired for C$0.17 per share and for our debt obligations to be refinanced, restructured or redeemed via an arrangement agreement with key stakeholders including affiliates of certain funds managed by affiliates of Apollo Global Management, LLC and funds advised or sub-advised by GSO Capital Partners represents a renewed opportunity for Mood to drive growth and value for clients and stakeholders, longer term. The transactions we have announced will provide Mood with the flexibility needed to accelerate our transformation, innovation and growth opportunities,” concluded Mr. Richards.

Read the complete release:

Q1 2017 Mood Media Earnings Press Release_5.10.2017 final